1001 Chavista Rip-Offs

April 3, 2015


While the media in Venezuela barely reports corruption scandals, let alone investigate them, thanks to the press abroad and the Chavista crooks that get caught, we have learned 1000 ways in which Chavismo has ripped off and arbitraged the Government for their own personal profit. From Argentinean bonds, to contracts, to Illaramendi, to Maletagate, to Andorra, there have been a myriad ways to make money. By now the numbers are so scandalous that even a former Minister of Planning that oversaw over much of the time how these rip-offs took place, claims that there were US$ 22 billion in fake import orders in 2012 alone.

But details are hard to get, as even in the Andorra case we have only scratched the surface. But now we get a picture of the 1001th. Chavista rip-off thanks to investigative reporters from Argentina’s Clarin.

In 2005, the Venezuelan Government set up a trust at UBS to fund transactions between Argentinean and Venezuelan companies in the oil sector, apparently with emphasis in trading finished products. Money was supposedly put into this trust and as transactions took place, people got paid from it.

But according to a cable by Argentina’s Ambassador to Venezuela, the money was also used for personal profit. According to the Ambassador, someone borrowed US$ 90 million from the trust, exchanged it for Bolívars in the swap market and then repurchased the dollars at the official rate of exchange at the time which was about 14.5% lower than the parallel rate. The result? They obtained US$ 13 million more which they kept and returned the US$ 90 million to the UBS account.

Just think, the crooks that controlled the trust on both sides had sufficient weight in PDVSA and the Government that they could show up with Bolívars, which had nothing to do with the purpose of the trust or the Argentinean-Venezuelan cooperation since trading was in dollars, and buy dollars again. In theory, they could do this operation over and over, except they got caught by an honest Ambassador. (He was actually removed from his post due to the cable)

Remarkably, the man on Argentina’s side that scolded the Ambasasdor was none other than Claudio Uberti of Maletagate fame, who has been accused of quite a number of scandals and accusations. Uberti was the high ranking Argentinean official who supposedly asked Antonini to bring in the suitcases which arrived in Buenos Aires in a plane rented by PDVSA.

Of course, the Argentineans are interested in it, because the money may have ended up in an account in which Cristina Kirchner’s son has signature.

Think about it, at the time the difference between the official rate and the parallel rate was “only” 15%, imagine the deals, “guisos” and rip-offs that went one when the difference was like last year up to 3,800%.

No wonder the Government does not want to remove the Bs. 6.3 per US$ rates, with that rate, anyone with access to it, can make the same US$ 13 million, by selling 336,000 dollars in the parallel market and buying 13.36 million dollars at Bs. 6.3 per US$.

It is arbitrage on steroids…

26 Responses to “1001 Chavista Rip-Offs”

  1. sicher Says:

    Thanks for sharing your thoughts on mediate. Regards

  2. moctavio Says:

    This swap market no longer exists, it was shut down by the Government in 2010. It was legal at the time. At the time selling US$ 90 million was not terribly difficult, as the average daily volume was around US$ 80-100 million, it would take three days maybe to sell that (easier to sell than to buy)

    These guys got the cheap dollars by being in the Government and obtaining official dollars via PDVSA or the Venezuelan Treasury. It was all part of the same corruption racket that led to Illaramendi doing the same thing without justification.

    From your question it appears you may have missed the fact that this was 2005.

    • The end of the swap market created a pretty weird opportunity to buy cheap black market bolis, pay venezuelan taxes and get credit for usa taxes, which could be booked at the CADIVI rate. Countries with price controls create lots of fuzzy angles. I couldn’t use that trick, but I know people who did.

      We had a similar opportunity when ARGENTINA set up their stealth forex controls many years ago. I had a friend who moved gold coins between Colonia and Buenos Aires.

      The best arbitrage in the world is for Venezuelan gasoline shipped into Colombia or Aruba. Taking whisky into Myanmar to swap for gems was second best.

  3. R Osores Says:

    Miguel, can you clarify what is the “swap” market? Is it the same as the black? or the blue?(argentina)

    Additionally,can you expand on the logistics of selling 90 million US in the swap market, where is this swap market and do they give you venezuelan “cash”?

    Then, how does one get the cheap dollars? Again, do you go to the Venezuelan National Bank (or whatever its name is) with cash? and they give you dollars in cash? just because? ….. don’t you have to justify the purchase of cheap dollars with some business deal importing something or other?

  4. snollie Says:


  5. ce h Says:

    A sampling..and…Have a Happy Easter…anyway!

  6. Paul Says:

    Just more of the same and no surprise to anyone reading Venezuela news. Lamentable but there does not appear to be an end in sight. Who can stop the corruption? I suppose when the economy totally collapses and there is nothing left to steal there might be some type of foundation left to build upon. Too sad.

    • Come on Paul, the economy won’t totally collapse. Like I said in Margarita, “the revolution’s ability to inflict pain and misery on the people, and the people’s ability to take the abuse, are seriously under appreciated”. Those ought to be the words written on Venezuela’s shield, right underneath the left facing mangy horse.

  7. Mick Says:

    Every form of government will have corruption. The more control or power people give to their government, the more corruption they are inviting in. Socialism has proven, in every case, to be an excellent cover for this type of crime. Just look at the members of Chavez’s family. Are they not all extremely wealthy now compared to 20 years ago?

    No leader is going to walk on water. They all have their good and bad points. But, when they chose Chavez, they sold their souls to the devil for a few handouts purchased with his excrement. Now it is going to hit the fan.

  8. Sledge Says:

    Unfortunately, at this point such as putrid-to-the core, corrupt country with corrupt Soul could only be tamed and rectified with radical means. Another form of totalitarian regime, right-wing dictatorship.

    No “MUD” or more Adecos/Copeyanos will save this ship. Just restore some liberties, and steal a bit less, that’s all. As we saw for decades before Chavismo: not as bad, but also corrupted and disastrous to the core.

    Something like Singapore, or what Chile had, I guess.. but look at Singapore,, they’ll cut your hand off if you steal. They have a program. They invest. Tough, tough dictatorship, but hey, look at the results.

    So what we are getting is the worst of the worst: a neo-pseudo dictatorship. also an authoritarian Regime, but a crooked “socialist” piece of crap. Not even little inept thieves like the adecos/copyanos. Not even a tough Military dude to straighten things out. Those, of course, were also bought out, oil for souls.

    • Autobot Says:

      You might want to apply the most gruesome punishments imaginable for doing something as stupid as passing a red light, but that won’t solve anything, just look again at our example in Venezuela, on a blink, you might get the worst punishment ever, death sentence, by being sent to any of the many hellholes that are the concentration camps (oh, I mean, PRISONS) in Venezuela.

      No, dude, the problem is that when someone does something bad, they GET AWAY WITH IT, why do you think this country has the highest murer rate of all the bloody world? And why do you think the regime destroys the country as they please? Because some rotten thing called IMPUNITY, which makes everything rot and fail.

      That is why things might work in Singapore, because the impunity is near zero, criminals don’t crime because they know there’s an actual risk of getting caught and face the consequences of their assholery; but here, in Venezuela? Not by a long shot, dude.

  9. Sledge Says:

    Also, it’s almost useless to try and detail where the corruption is most embarrassing or gargantuan: It’s everywhere.

    With every country, at every level. From the campesino que pide “fiado” at the corner store and doesn’t pay back, to the worker’s unions, to mid-class, upper class, government and private enterprise, just abou say 95% of our people are CORRUPT, one way or another, and as much as they can.

    Of course, those who steal the most are usually from a few prominent families, related to oil and/or the bogus government. Sure, now with the dollar scam and oil scams it’s gotten Astronomical.

    But it’s always been the same problem, ever since we discovered the oil and riches, and instead of “sembrarlo”, invest, diversify, while educating the population, we got thoroughly corrupted by the excrement.

  10. Sledge Says:

    This is precisely the real problem in Corrupzuela.

    While we waste our time with fancy macro-socioeconomic conjectures, convoluted international financial analysis, outlandish theories about miracle cures..

    THEFT. Corruption. Everywhere, at all levels. That’s it. Look no further.

    As soon as you hear or read the name Venezuela, inevitably, the perpetual common denominator is GUISO. Tigrito, palanca, special favors, obscure deals, multi-million $ scams.. Every time. Forget about anything else. If were were Slightly less Corrupt (even as Putrid as Adecos and Copeyanos were was better), Vzla would improve by leaps and bounds. But no. We’re doomed by Corruption. Period.

    That, of course is closely tied our our pervasive under-education / ineptitude, and other lamentable character traits, which can also be closely linked to the pertinent title of this blog, quite a disastrous phenomenon.


  11. Sovereignty: one of the most powerful international legal concepts of all time. It is the legal basis of each and every country on earth.

    It bestows many institutional powers on a nation, including the power to politically set the foreign exchange rate (outside the free market) and the power to create money.

    On the other hand: It´s abuse in monetary policy is the basis of the hyperinflationary destruction of only the money supply. Zimbabwe abused it and hyperinflation destroyed only their money supply.

    The stable measuring unit assumption which is the basis of traditional Historical Cost Accounting destroyed the real value of constant real value non-monetary items (e.g., salaries, wages, capital, retained profits, trade debtors, trade creditors, taxes payable, taxes receivable) in the non-monetary economy.

    Venezuela abuses sovereignty with the 6.3 Bolivar/USD rate and it destroyed and is destroying the real value of the VZ money supply via hyperinflation while Historical Cost Accounting (the stable measuring unit assumption – your accountants assume your hyperinflationary currency is perfectly stable for many accounting operations) destroys the real values of your salaries, wages, capital, profits, taxes, trade debtors and trade creditors.

    It is relatively easy to fix with indexation (the alignment of rates to avoid distortion) in a country with sound governance like Finland or Iceland. The fix will never be applied under Chavismo since it will stop the arbitrage jackpot.

    • Sledge Says:

      classic example of fancy theories..

    • Autobot Says:

      Sovereignty: one of the most powerful international legal concepts of all time. It is the EXCUSE by which all dictatorships and shitty regimes justify all the atrocities they commit against the people living in said country.

    • Valued Customer Says:

      All of your comments here shilling indexation are totally moot since we are talking about a Chavista government and not Finland or Iceland.
      Honestly, why bring your economic theories into a conversation about Venezuela. You might as well be trying to sell McRib sandwiches in Israel.

  12. A sidenote: There is no substantial proof for the Kirchner/Garré bankaccounts as of yet. The reporter who worte the article defended his accusations with “Let Máximo show that he has no bankaccounts in the US”. Wow, way to go.

    I’d be very careful with Clarín’s investigative reporting as they’ll report about anything that damages the Kirchner administration, without much regard for principles of journalism. La Nación seems to be moving in the same direction.

    • When the Kirchner government is sirven out of office it will be investigated in depth, at that time i’m sure there will be a series of indictments. The way I see it the Kirchner regime carries out corruption in a massive scale, $13 million is probably a very small portion of what they have been stealing. It’s a typical Latin American tin horn populist and communistoid regime.

    • moctavio Says:

      Yes, but the cable from the Ambassador has not been questioned.

      • That’s right. But I sincerely doubt there will be a full accounting until the Kirchneristas fall. For example, I’m sure they’ll find cash flowing between current YPF shareholders and the Kirchner machine. That sale of 25 % of YPF’s stock by Repsol sure looks murky.

        While I’m at it, here’s the Cuban reaction to the move by some to make the Castro family dictatorship feel at home in Latin American organizations


        • Ira Says:

          That article was really, really good. Exceptionally well-written.

          It beautifully paints the moral and accurate position that regional associations and summits like these shouldn’t be about the right to self-determination on nations, but the right to self-determination of those nations’ PEOPLES.

  13. Noel Says:

    Reading serious Argentine and Brazilian press (Clarin and Veja) one gets a sense that the political “elites” of these two countries and Venezuela stole public money with abandon, and in their greed, didn’t hesitate to get compromised with shady international characters.

    Unfortunately, the traditional oppositions in these same countries have been pathetically ineffective. If commodity prices remain low, the whole region could see a financial crisis on the scale of that of the 1980s.

  14. Maria Says:

    Holy macro! It boggles the mind.

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